Bahrain, an archipelago nation of 1.5 million people, is emerging as an unlikely leader in the artificial intelligence race in the Middle East.
Bahrain’s push to integrate AI into its economic vision, national security infrastructure and workforce development is part of a rapidly growing movement across the Middle East. AI has become a central focus as countries in the region race to diversify their economies and establish themselves as tech hubs.
Bahrain’s comprehensive AI strategy exemplifies the Middle East and North Africa (MENA) region’s ambitions. A study suggested it could be a model for wider AI adoption in the area.
“The rise of AI-driven eCommerce platforms can significantly expand the retail sector, facilitating access to global markets for local businesses,” geopolitical analyst Irina Tsukerman, president of Scarab Rising, told PYMNTS. “This boosts domestic production and consumption, reducing dependency on oil revenues.”
Bahrain’s FinTech sector sits at the heart of its AI ambitions. The country has already established itself as a FinTech hub in MENA, using its strategic location and business-friendly regulations to attract innovators from across the globe.
The Central Bank of Bahrain is trying to encourage AI adoption in the financial sector. It has issued directives on digital finance advice and established a regulatory sandbox where FinTech startups can test innovative AI-powered solutions in a controlled environment.
Bahrain’s AI aspirations extend beyond finance. The country is also integrating AI into its national security framework, joining an international working group on the safe use of AI in the military. In partnership with the United States, Bahrain will lead efforts to develop guidelines for implementing AI in defense applications.
Bahrain is also using AI capabilities in maritime security. In collaboration with United Kingdom-based SRT Marine Systems, the country has implemented AI-powered surveillance systems to monitor its coastal waters, creating what the company described as a protective barrier around the island nation.
Other Middle Eastern nations are in the AI race.
MGX, a United Arab Emirates state-backed tech investment company, is considering joining a multibillion-dollar funding round for OpenAI that could value the AI firm at $150 billion. The move aligns with the UAE’s broader strategy to position itself as a global AI hub, using its substantial sovereign wealth to reduce dependence on oil revenues.
A $40 billion AI investment fund from Saudi Arabia signals a seismic shift in the Middle East’s tech landscape. By 2030, the Middle East could capture 2% of AI’s total global benefits, amounting to approximately $320 billion.
The UAE has unveiled an AI strategy to position the country as a global leader in AI by 2031. Saudi Arabia is investing billions of dollars in AI research and development as part of its Vision 2030 plan to diversify its economy.
“The current data center capacities in Saudi Arabia and the UAE are approximately 123 megawatts and 235 megawatts, respectively, lower than those of many European countries,” Tsukerman told PYMNTS. “Saudi Arabia is currently the fastest-growing data center market, with a projected total capacity of 854 megawatts by 2029.”
The impact of AI extends beyond the technology sector.
“AI is already having a transforming effect on many of the traditional industries in the Middle East,” Tsukerman explained. “AI-enhanced seismic data interpretation helps identify hidden resources and optimize drilling in the oil and gas sector.”
In finance, she said, “Chatbots and virtual assistants provide 24/7 customer support, improving client engagement and reducing operational costs for banks. AI tools assess risk by analyzing vast datasets, enabling banks to make informed lending decisions and manage investment portfolios more effectively.”
The race for AI dominance in the Middle East extends beyond the UAE and Saudi Arabia, Ilya Smirnov, head of the AI/ML Department at Usetech, told PYMNTS.
“Slightly less influential, but still notable, are Oman, Bahrain, Qatar and Kuwait,” he said, adding these nations are implementing comprehensive strategies to boost their AI capabilities.
AI’s potential in the region spans multiple sectors.
“AI has great potential for development in the Middle East…,” Smirnov said. “All of this allows the region to stand out in the market and transform many industries with new technologies.”
He cited a specific example from the energy sector, where AI has been used to tackle production challenges.
“As part of this, our company has developed a resource consumption model based on a decision support and decision-making system,” he said. “It allows us to reduce fuel consumption by up to 5% per day and improve the quality of product output.”
The AI revolution also brings challenges.
“Where many of the Middle Eastern states gain in resources and engagement, they lack in local skillset and thorough understanding of ethical, legal and other issues around the AI framework, which will likely delay advancements in many of the areas and cause setbacks in others,” Tsukerman said.
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